Japan Tax Authority Deploys Specialized Agents To Track Under-Reporting Crypto Investors

News | June 6, 2019 By:

Japan’s National Tax Agency will reportedly deploy about 200 specialists to detect undeclared income gained from cryptocurrency trades, Nikkei Asian Review reported.

The tax authority said that the specialists will be divided into project teams spread among 12 offices nationwide starting in July. They will assist in tax evasion investigations, while also accumulating and sharing expertise with tax officials.

Citing unnamed sources, local news outlet Asahi Shimbun reported that about 50 individuals and 30 companies around Japan failed to declare crypto-related income to the tune of at least 10 billion yen ($93 million) over a period of several years until March of this year. The Japanese government consider crypto-related revenues as miscellaneous income, which is taxed at 55%. The tax rate has led some individuals and businesses to seek ways to avoid reporting their gains.

“Gains from cryptocurrency transactions are considered miscellaneous income,” the report said. “If salaried employees earn more than 200,000 yen in such income over the course of a year, they are required to report it. However, the high rate at which miscellaneous income is taxed–at up to 55 percent–has apparently led to an increase in efforts to conceal it.”

Crypto platform operators have refused to voluntarily provide data, making virtually impossible for tax authorities to track down individuals who trade cryptocurrency on foreign exchanges or sell their holdings for other virtual currencies. But a law that takes effect in January 2020 will empower tax officials to order the release of the information, such as the names of top-earning clients, under certain conditions. Noncompliance with an order could result in penalties.

“The fact that we are able to seek and confirm client data under the force of law will become a powerful weapon,” a senior National Tax Agency official said.